Suppliers can find transactions of these deduction types in the Excel Download from the Walgreens VAIS portal. Below is a breakdown of each deduction type and what it means:
Shortages (Quantity Debit Note)
A shortage occurs when Walgreens reports that they received fewer units than what was originally invoiced. Compared to larger retailers, CVS often does not identify the specific types of shortages that they believe occurred.
In the export, these can be identified by the column named "Text" which includes the invoice # and a trailing K1 - Ex: 123456K1
Pricing Deductions (Pricing Debit Note)
These occur when the amount on the invoice differs from the agreed-upon price. Misunderstandings in pricing agreements, mistakes in the creation of invoices, or delays in implementing price adjustments can all lead to pricing deductions.
In the export, these can be identified by the column named "Text" which includes the invoice # and a trailing K2 - Ex: 123456K2
Damages/Defectives
This category applies when Walgreens receives items that are damaged, defective, or otherwise unsellable. These deductions usually relate to manufacturing flaws, physical damage, or quality issues found at the time of receipt.
In the export, these can be identified by the column "Ref. Key 3" where the value = "1506" and the column "Description" = "Customer Invoice"
Compliance (Cost Recovery)
Occurs when suppliers fail to fulfill Walgreens' operating standards, such as mislabeled products, improperly packaged goods, late deliveries, or other logistical infractions.
In the export, these can be identified by the column "Ref. Key 3" where the value = "EDI Cost Recovery" or "DC Cost Recovery" and the column "Description" = "Customer Invoice"
Post Audits
Walgreens makes post audit deductions after reviewing transactions in the past to find anomalies like overpayments, unused allowances, or unclaimed discounts. These audits make sure that all financial transactions follow the terms and circumstances that have been agreed upon.
In the export, these can be identified by the column "Description" where the value = "Lawson Credit Memo" Or "Manual Credit Memo"
These may also be identified by the column "Document Header Text" where the value = "PA" or "[PA]POST AUDIT DEDUCTION" but this may not be fully inclusive.
Allowances
Allowances refer to agreed-upon financial incentives or discounts provided by suppliers to Walgreens. Deductions in this category occur when there's a belief that the supplier has not honored these agreements, either due to miscalculations or misunderstandings regarding the terms.
At Walgreens, most suppliers seem to avoid calculating these charges on their own when invoicing and let the retailer take the deduction under the assumption that the majority will be valid and expected. This doesn't mean that errors can't happen though.
In the export, these can be identified by the column "Ref. Key 3" where the value = "DLS" and the column "Description" = "Customer Invoice"
Returns
This deduction relates to goods that Walgreens sends back to the supplier, frequently as a result of product recalls, overstock, or expired goods. The cost of these returned goods is covered by the related deductions, which may also include extra handling or processing charges.
In the export, these can be identified by the column "Description" where the value = "ERS Invoice - Net"